CAC 40: A small alert on week 1, weekly candle under surveillance

(News Bulletin 247) – The prospect of a faster-than-expected tightening of US monetary policy will have had repercussions on the CAC 40, which lost 1.72% yesterday to 7,249 points, weighed down by the records of the luxury and tech, particularly skin-friendly. Over the entire session, Kering will have lost 3.06% to 718.10 euros, Dassault Systèmes 3.65% to 48.685 euros, LVMH 4.08% to 727.10 euros, Téléperformance 4.08% to 378, 10 euros, Gemini cap 4.37% to 203.30 euros, and Hermès 4.69% to 1,504.50 euros.

The markets were surprised by the transcription of the then tense discussions around the schedule for reducing the balance sheet, with the publication of the Minutes on Wednesday evening. The slightly more “hawkish” tone adopted by the Fed at its last monetary policy meeting than expected appears more as an excuse to indulge in some profit-taking than as a real surprise, according to Jeffrey Halley, analyst at Oanda. “The minutes revealed that committee members felt that risks of high inflation were now lingering, and that there was general agreement on accelerating rate hikes, with three interim rate hikes. Exactly what we were told at the “post-FOMC” meeting by President Jerome Powell. The only surprise, if you can call it that, is that some members felt that the Fed should start cutting back its balance sheet shortly after its first rate hike “he comments.

The Minutes are a detailed report, including the content of the exchanges and debates which animated the FOMC two weeks previously. The operators, beyond the monetary policy decisions they already know, scrutinize the balance of power between the Hawkish and the Dovish, the arguments used in the debates, and more broadly the tone of these debates. For the more curious, here is the document released yesterday, and which caused this downward acceleration.

Bastien Drut, Head of Thematic Macro Strategy at CPR AM summarizes: “During the FOMC in December, the Fed decided to accelerate” tapering “, that is to say to reduce its net purchases a little more than expected. of securities (Treasury securities and MBS), with an end of net purchases expected in mid-March 2022. The next question about the Fed’s balance sheet was to know if the size of the balance sheet would remain stable for some time or if it would be While Jerome Powell had let it be known that discussions were underway on the subject, the FOMC minutes from December indicate that the reduction in the balance sheet should actually happen fairly quickly in 2022: it is mentioned there dozens of times!“

In terms of values, Carrefour dominated the charts of the flagship index with a new gain of 6.3%, following an increase of 5.1% on Wednesday, to be blamed on rumors of a new takeover offer to come. by Auchan.

In terms of statistics, operators learned of satisfactory figures, beyond expectations without showing overheating, on producer prices in November (+ 1.8% in the Euro Zone on a monthly basis). Across the Atlantic, little deviation to report from their respective consensus for weekly registrations for unemployment benefits and the monthly deficit (November) of the trade balance. In contrast, the services PMI (ISM) came out at 62, far from the target (67) and from the previous month (69.1).

Across the Atlantic, the major equity indices closed in the red yesterday, but in smaller proportions compared to Wednesday. The Dow Jones contracted 0.47% to 36,236 points and the Nasdaq Composite contracted 0.13% to 15,080 points. The S&P 500, benchmark barometer of risk appetite in the eyes of fund managers, symbolically lost 0.10% to 4,696 points.

An update on other risky asset classes: around 8 a.m. this morning on the foreign exchange market, the single currency was trading at a level close to 1,1300$. A barrel of WTI, one of the barometers of risk appetite in financial markets, was trading around 80,00$.

To be continued on the agenda this Friday, to follow in priority the consumer prices in very first estimates for the month of December in the Euro Zone at 10:00 am, and the NFP report (Non Farm Payrolls) on Employment in the United States, Federal Monthly Report. As a reminder on Wednesday, operators took note of the results of the ADP (Automatic Data Processing) survey on employment. According to the private human resources firm, the US economy created 807,000 jobs in the private sector (excluding agriculture) in December, largely beating the target, the highest since May.

KEY GRAPHIC ELEMENTS

The underlying trend is not threatened at this stage, but it is clear that the losses on Wall Street yesterday had repercussions in Paris, in the form of one-off and targeted profits in Paris, profit-taking whose magnitude must be considered in the light of initial progress, case by case.

We still remain well above a bullish slant and the 100-day moving average (in orange).

PREVISION

With regard to the key graphic factors that we have identified, our opinion is neutral on the CAC 40 index in the short term.

We will take care to note that crossing the 7500.00 points would rekindle the purchase tension. While a break of 7000.00 points would revive the selling pressure.

Hourly data graph

Daily data graph

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